According to Seoul's trade ministry on Sunday, South Korea is moving to strip Japan from its list of trusted trading partners as early as this week.
The ministry announced that it has completed nearly all the procedures for the removal of Japan from its list of nations given favored export procedures, adding that Tokyo operates "an export control system that violates international norms."
With that, South Korea plans to classify its trading partners into three groups from the current two, placing Japan in the middle group of the three.
"This will include countries operating an export control system that violates international norms, and Japan will be placed in the in-between group."
Once removed from the whitelist, local companies shipping strategic goods to Japan will have to hand in five different documents in order for individual approval.
Currently they only need to submit three documents.
The approval process will also take roughly 15 days, as opposed to the current five days for countries on the whitelist.
However, despite Seoul's decision to remove Tokyo from its whitelist as early as this week, the trade ministry says there's still time to negotiate.
The ministry says even after the new policy is implemented, its still willing to hold talks with Japan, in hopes of improving the soured ties between the two neighbors.
In a separate action, Seoul filed a complaint with the World Trade Organization last Wednesday, over Japan's restrictions on exporting key industrial materials to South Korea.
However, the complaint does not cover Japan's decision to remove South Korea from its list of trusted trading partners.
Lee Seung-jae, Arirang News.